False Sense of Urgency Over Changes to Social Security

WASHINGTON, DC- Many policymakers and analysts are insisting that there is an urgent need to make major changes to Social Security. Their argument that long-term imbalances make the case for action now have even swayed some who consider themselves supporters of the program. A new issue brief from the Center for Economic and Policy Research, calls attention to the fact that Social Security will be fully solvent for the next 27 years and any premature action to make changes to the program will have a severe impact on millions of near retirees.

“Misinformation about Social Security has led many to believe that Social Security is in immediate danger of insolvency” said Dean Baker, a co-director of CEPR and author of the report, “but the program will be fully solvent for almost three more decades. Furthermore, even if no changes are ever made, a child born in 2010 can expect to see a benefit that is more than 50 percent larger in real terms than what current retirees receive today.”

The issue brief, “Action on Social Security: The Urgent Need for Delay,” argues that the decline of traditional media and the rise of new media is likely to lead to a public that is better-informed about the state of Social Security’s finances. In addition, the growth in the portion of the population dependent on Social Security is likely to make benefit cuts more politically difficult in the future.

The brief also notes that the cohorts of near-retirees who will be protected from benefit cuts by delaying action have already been victims of wage stagnation in their working lifetime. They have then seen much of their wealth destroyed with the collapse of the housing bubble and the resulting stock market plunge. Protecting this generation from further harm is an important goal of delay.

As demonstrated in the report, there is a great amount of public confusion over the current and future state of Social Security. Though more accurate analyses of the program are making their way into the public discourse, at present there is no need to rush forward with changes and cuts to Social Security.